Albright v. Burns

• Decision Date: 16 January 1986
• Citation: 503 A.2d 386,206 N.J.Super. 625
• Parties: Anita M. ALBRIGHT, Coexecutrix of the Estate of Etta Mae Burns, and Henry Farer, Substituted Administrator with the Will Annexed of Emil E. Bruch, Plaintiffs-Appellants, v. John F. BURNS, Individually and as Executor of the Estate of Emil E. Bruch, and Harvey R. Poe, Individually, and as Attorney for the Estate of Emil E. Bruch, Defendants-Respondents.
• Court: New Jersey Superior Court — Appellate Division

Page 625

206 N.J.Super. 625

503 A.2d 386

Anita M. ALBRIGHT, Coexecutrix of the Estate of Etta Mae Burns, and Henry Farer, Substituted Administrator with the Will Annexed of Emil E. Bruch Plaintiffs-Appellants, v. John F. BURNS, Individually and as Executor of the Estate of Emil E. Bruch, and Harvey R. Poe, Individually and as Attorney for the Estate of Emil E. Bruch, Defendants-Respondents.

Superior Court of New Jersey Appellate Division.

Submitted Nov. 26, 1985.

Decided Jan. 16, 1986.

Margolis, Chase, Kosicki, Aboyoun & Hartman, P.A., Verona, for plaintiff-appellant Albright (Eric L. Chase, Verona, of counsel; Mark C. Perlberg, Verona, on the brief).

Farer, Siegal & Fersko, Westfield, for plaintiff-appellant Farer (Jack Fersko, Westfield, of counsel and on the brief).

Keith J. Burns, Englewood, for defendant-respondent Burns.

Ribis, McCluskey, Graham & DeCotiis, Short Hills, for defendant-respondent Poe (Bruce R. Volpe, Short Hills, and Laura M. McGeough, on the brief).

Before Judges SHEBELL, MUIR and MATTHEWS.

The opinion of the Court was delivered by

SHEBELL, J.A.D.

Plaintiffs appeal the denial of their motion for partial summary judgment and the granting of defendants' motions for judgment at the conclusion of plaintiffs' case.

Plaintiffs brought suit against defendants, John F. Burns and attorney Harvey R. Poe, charging fraud, conversion, breach of fiduciary duty and negligence, alleged to arise out of dealings with the personal assets of Emil E. Bruch, which transpired before and after his death.

Plaintiff Anita M. Albright, the daughter of Etta Burns, is coexecutrix of her mother's estate. The mother, the sister of Emil Bruch, was the residuary legatee under his will. John Burns, the brother of Ms. Albright, was named coexecutor and trustee under the mother's will. The two children were to share equally all property interests Etta was to receive under Emil's will. Plaintiff Henry Farer is the substituted administrator of Bruch's estate pursuant to an order of the Probate Part removing Burns as executor and Poe as attorney for the estate, upon exceptions raised by Ms. Albright.

Plaintiffs maintain defendants participated in the unauthorized sale of 1,100 shares of A.T. & T. stock owned by Bruch prior to his death. It is their contention that because of a collusive arrangement between Burns and Poe, Burns was able to use the proceeds of the stock sale, under the guise of a loan, for his own business ventures, thereby depriving Bruch's estate of its largest asset.

Plaintiffs moved for summary judgment against Poe. The motion was denied. The motion judge was of the opinion there was a factual issue as to whether Poe deviated from the standard of care required of an attorney. The allegations of fraud made by Albright against Poe were dropped during the course of trial.

At the close of plaintiffs' case, defendant Burns consented to a judgment against him in the amount of $89,139.72, being the amount of the loan plus interest. The court dismissed all of the plaintiffs' remaining claims against both defendants for lack of proof.

The evidence reflects that Bruch's health deteriorated during the last few years of his life and that he required hospitalization on five separate occasions from November of 1978 to his death on December 29, 1980. In December of 1978 while hospitalized with a fractured clavicle he executed a general power of attorney in favor of his nephew, the defendant Burns. According to Burns, the uncle was having difficulty in communicating, and would lose his memory and touch with reality from time to time.

Burns desired to sell his uncle's A.T. & T. stock in order to use the proceeds for his business. He discussed this intention with his uncle, who expressed concern, indicating he might need the money for his own care. Burns assured his uncle he would not need money because he would care for him as he was earning $800 per week. It appears, however, Burns was not receiving any wages but had instituted a law suit to compel their payment. He also represented the money would be used on a short-term basis, and would be repaid in 30 to 60 days. Bruch indicated he did not like the idea, but finally reluctantly consented in March of 1979.

Burns consulted Poe who had represented him in other matters. Poe recognized there was a potential conflict in Burns' use of the power of attorney to sell the stock in order to make a loan of the proceeds to himself. He advised Burns against such action. Burns insisted he had a valid power of attorney, had received permission from Bruch and was therefore going to proceed notwithstanding Poe's advice. Burns obtained the stock certificates from Bruch's safe deposit box and sold the stock.

Burns instructed the broker to make the check payable to Emil Bruch and to forward it to Poe. Poe received the check in early April of 1979. Both Burns and Poe endorsed the check which Poe deposited in his trust account. On April 11, 1979 a note at 6 percent interest for the full amount of the check was prepared by Poe and executed by Burns. No collateral was pledged as security although Burns owned a biological laboratory in Florida which allegedly had receivables and equipment valued around $165,000. Poe did not notify Bruch of receipt of the sale proceeds and within two days of their deposit entirely disbursed the funds by checks drawn for Burns' own purposes.

Upon assuming his duties as executor of his uncle's estate, Burns retained Poe as attorney for the estate, even though a different attorney had been requested in Bruch's will. The promissory note was included in the valuation of the estate, listed in the transfer inheritance tax returns and its value used in computing the tax on the estate as well as in determining Burns' commission. Ms. Albright in filing exceptions to the accounting made by Burns took exception to the reporting of the note, its interest rate and Poe's attorney fees. She requested an explanation of the transaction occurring before Bruch's death.

Plaintiffs seek compensatory damages from Poe asserting he owed a fiduciary duty to Bruch and his estate and committed malpractice in failing to properly advise Bruch concerning the loan or by failing to properly protect the stock sale proceeds. They also seek punitive damages.

Summary judgment must be granted if the proofs indicate that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. R. 4:46-2. The trial court must not decide issues of fact; they must only decide whether there are such issues. Judson v. Peoples Bank & Trust Co. of Westfield, 17 N.J. 67, 73, 110 A.2d 24 (1954). The moving party must sustain the burden of showing the absence of a genuine issue of material fact. Id. at 74, 110 A.2d 24. All inferences of doubt are construed against the movant and in favor of the opponent. Id. at 75, 110 A.2d 24.

The test for involuntary dismissal of plaintiffs' case under R. 4:37-2(b) is whether: ... accepting as true, all the evidence which supports the position of the party defending against the motion and according him the benefit of all inferences which can reasonably and legitimately be deduced therefrom, reasonable minds could differ, the motion must be denied. [Dolson v. Anastasia, 55 N.J. 2, 5, 258 A.2d 706 (1969) ].

The court is not concerned with the weight, worth, nature or extent of the evidence but only with its existence as viewed most favorably to the party opposing the motion. Id. at 5-6, 258 A.2d 706.

The requisite elements of legal malpractice are: 1) the existence of an attorney-client relationship creating a duty of care upon the attorney; 2) the breach of such duty; and 3) proximate causation. See Tormo v. Yormark, 398 F.Supp. 1159, 1169-1173 (D.C.N.J.1975).

We first consider whether an attorney-client relationship can be deemed to exist between Poe and Bruch where there has been no articulation of such professional engagement between the parties. It has been held that an attorney's acceptance of representation need not be articulated and may be inferred from the conduct of the parties. In re Palmieri, 76 N.J. 51, 58-59, 385 A.2d 856 (1978).

We find sufficient relationship, even though there was an absence of contact between Bruch and Poe. Burns was acting under the power of attorney he obtained from Bruch. It was his duty to act in Bruch's best interests. Poe was aware of the relationship and potential conflict. In such circumstances, we hold that Poe's accepting the proceeds of the stock sale and his preparation of the promissory note were acts evidencing his acceptance of professional engagement on behalf of Bruch's interests. While it is true those same acts can also be viewed as being carried out to protect Burns' interests, rather than to protect Bruch, we would be remiss not to construe such acts to provide the greatest possible public protection where, as here, the attorney was well aware of the conflict and potential for harm.

Further, a member of the bar owes a fiduciary duty to persons, though not strictly clients, who he knows or should know rely on him in his professional capacity. Palmieri, 76 N.J. at 59, 385 A.2d 856; In re Hurd, 69 N.J. 316, 330, 354 A.2d 78 (1976); In re Genser, 15 N.J. 600, 606, 105 A.2d 829 (1954); Stewart v. Sbarro, 142 N.J.Super. 581, 593, 362 A.2d 581 (App.Div.1976), certif. den. 72 N.J. 459, 371 A.2d 63 (1976); Drinker, Legal Ethics (1953), at 92. We think it follows that privity should not be required between the attorney and one harmed by his breach of duty where the attorney had reason to foresee the specific harm which occurred. See Sbarro, 142 N.J.Super. at 593, 362 A.2d 581.

In Sbarro, 142 N.J.Super. at 593, 362 A.2d 581, we quoted from Donald v. Garry, 19 Cal.App.3d 769, 97 Cal.Rptr. 191, 192 (D.Ct.App.1971):

The determination of whether the duty undertaken by an attorney extends to a third person not in privity "involves the balance of various factors,...